US interest rate hike takes 0.5% off GDP growth in Latin America, says former BC president

Scenarios of tightening monetary conditions in the United States have resulted in a reduction of around 0.5% of GDP (Gross Domestic Product) for Latin American countries, said Ilan Goldfajn, former president of the BC (Central Bank) and director from the IMF to the Western Hemisphere, during participation in the Febraban Tech event this Thursday (11), in São Paulo.

“If in fact we are going to have a slowdown or recession in the United States, this will take away from Brazil, Peru, Colombia, from all Latin American countries, a part of GDP growth,” said Goldfajn.

Although the expectation is for a slowdown in the economy in the Latin American region, the IMF director added that one of the consequences will be an accommodation in commodity prices, with reflections for the deceleration of inflation.

“We are going to be more concerned with growth, and less with inflation,” said the former BC president. According to the expert, the possibility of the American economy not entering a recession is “very small”.

The IMF director also said that the fact that the Latin American Central Banks were the first to start the process of raising interest rates contributed to preventing a de-anchoring of medium and long-term market inflation expectations.

“This quick reaction by central banks managed to keep inflation anchored long, for 2024. In the short term inflation is high, but nobody thinks that means loss of control”, said Goldfajn.